Oregonians will see a rise in taxes and fees July 1.
Last summer, House Bill 2017 –– a $5.3 billion proposal to raise taxes and fees to pay for transportation upgrade across Oregon –– was passed by the state’s legislators.
An additional tax will appear on pay stubs after the first of the month. On July 1, employers are required to begin withholding one-tenth of 1 percent for a statewide transit tax from wages of employees working in Oregon. This will include both residents and nonresidents who are working in Oregon, but not for residents who are working outside of Oregon.
The funds from this tax will be deposited into a new Statewide Transportation Improvement Fund. According to the bill, the tax will fund public transit expansions, except light rail projects.
“This is an excellent piece of work,” said Rep. Cliff Bentz, an Ontario Republican and one of 14 lawmakers on a social committee that crafted the transportation plan during last year’s session.
The bill states that the Oregon Department of Revenue may require employers to submit the new payroll tax with the quarterly combined tax report, and requires that employers file an annual return with the Department of Revenue.
According to Ernst & Young LLP’s –– a research and investing company –– Oregon currently requires the withholding of state income tax from wages and, in some areas of the state, employer payment of taxes to fund mass transit.
Because there will be an increase in the taxes withheld under the new law, employers will need to modify their payroll systems to accommodate the withholding and deposit of this added transportation tax for both resident employees and their short-term business travelers working within the state of Oregon.
An employer that fails to withhold and submit the new payroll tax will be held responsible for the payment of the total tax that should have been withheld. Additionally, the employer will be subject to a penalty of $250 per employee, up to a maximum penalty of $25,000, if the employer knowingly fails to withhold and remit the tax.
Other tax and fee increases in Oregon going into effect on July 1 listed in HB 2017 include:
The gas tax, which will increase by 4 cents this year and a total of 10 cents in the next six years.
There will be a $15 fee added to the purchase of a brand-new adult bicycle that costs $200 or more. The goal is to generate $1.2 million a year for separated biking and walking paths.
Registration and title fees will increase for electric vehicles and hybrids because they pay little in gas tax.
There will be a one-half percent privilege tax on new light vehicles dedicated to electric vehicle rebates and multimodal transportation projects.
Creators of the bill estimate that the average driver will pay just under 1 cent per mile in taxes and fees.
Much of the generated funds will go to three major lane-addition projects in the Portland area: adding lanes to Interstate 5 through the Rose Quarter, adding lanes to the southern portion of I-205 and adding lanes to Oregon Highway 217 in both directions.
When the bill passed through the House last year, Rep. Greg Smith, R-Heppner, said the day was one “of elation.” Smith is one of the lawmakers who helped craft the transportation plan.
According to The Oregonian/OregonLive, the proposal originally would have raised at least $8 billion and included Portland-area taxes and fees to pay for highway expansion projects in the tri-county area. But that language was stripped and the proposed taxes lowered after pushback from Republicans and interest groups.
Democratic leaders also relented to Republican demands to modify the state’s low-carbon fuel standard, or “clean fuels” law. Bentz and other Republicans wanted to cap the law’s effect on the price of fuel and make its inner workings more transparent, demands Democrats eventually agreed to. The changes asked for by Republicans allow the clean fuels law to remain essentially intact, depending on market conditions.
The clean fuels bill was signed shortly after Gov. Brown entered office and she said at that time that a transportation bill needed to be separate from the clean fuels law. The law took effect Jan. 1, 2016 and requires oil distributors to begin reducing carbon “intensity” or offset those reductions by purchasing credits. They will not face penalties if they’re not in compliance.